"We will be taking all the supply"

Peter Rahal's betting it all on EPG

Earlier this week we posted about David’s latest raise and acquisition of EPOGEE, since then we have also learned that the brand is now being valued at $750M, and we have gotten the long awaited response from Peter Rahal himself, what are they going to do with the entire EPG supply?

“We will be taking all the supply” he messaged me while sharing the official funding news.

Of course I had to ask the question on everyone’s mind…

What are you planning to do with the existing brands that use EPG, is it like a direct cut or will you taper it off?

“Given supply situation, cease supply.” he replied.

One of my favorite new media shows, TBPN had Rahal on to talk about the funding, as a veteran CPG founder, Peter Rahal’s reponse makes so much sense:

“CPG sucks—it does. It sucks because of the competition. So right, we know there’s like 3 moats, there’s the brand moat, really abstract and takes a long time so I don’t put much merit to it but it’s a real thing, then there’s like trade secret mode, or distribution and then there’s a third moat which is actual IP, so we actually have with our business now and part of the reason we got a really good valuation it’s because we have a really defensible business with 3 moats, which allows us to protect our cash flow. And so like you know in three years we’re not going to have 10 copy cats, they’ll try on protein, but it won’t be there in calories.”

David’s projected to make around $140M in sales at the end of their first year which is coming up soon in September, and that’s mostly DTC and through TikTok shop,

Rachel Karten

actually interviewed them on the success of leveraging that space as an emerging brand, they are now investing in more retail expansion.

It’s crazy to look back at my now accurate predictions about the brand itself, which got Peter Rahal to dub me a “visionary” today—they are now going full in on protein-as-platform, in this more specific case, EPG, which is why Peter mentions that other brands can mimic the protein but not the reduction in calories. One of the most succesful brands that used EPOGEE has been Nick’s, which started with protein forward ice cream pints and then pushed into other categories, a brand that had gotten incredible success leveraging EPG, has now reformulated, what I’ve heard could be a byproduct of them integrating their US and EU business, (EPG isn’t GRAS in Europe) —it looks like they may have seen the writing on the wall.

I can’t seem to find another instance where a brand in food and beverage was able to pull of a move like David, cutting off your competition at the source. Some of the existing EPG brands are of course not looking to go down without a fight—a spokesperson for OWN Your Hunger who has been making nut-based spreads and dessert bars using EPG since 2019 said,

“We’re investigating legal remedies for an obvious anti-trust violation. We believe in fair competition so long as it’s legal. This is blatant cheating and we will not go quietly”.

Is what David is doing really anti competitive? The brand has pulled a brave move and is betting it all on one single ingredient, I tapped into a food scientist friend to get their take on EPG as a platform considering the brewing concerns around gastrointenstinal issues, although most studies being cited have too small of a sample size to really tell us anything—

“I can’t say too much on the clinical complication as you said, the data is limited.

I think they are definitely getting confidence from the success of prebiotic soda. Like a GI complication is common for inulin or other prebiotics consumption, but people normalize it cuz that’s what people expected. By this time they should have a percentage of customers experiencing issues and 1)they believe the number is manageable; 2)most people would normalize bubble gut to too much protein consumption instead of a novel ingredient they don’t know.”

Curious to see how many actually see David as the Goliath in this situation, either way. As always, would love to know what you think!